By MATT CHANDLER
Buffalo Law Journal

Karen and Anthony Regan purchased 107 Blue Heron Court in 2007 from owners Elaine and Robert Altman. They spent $282,000. It should have been just another residential real estate transaction - completed, recorded and, except for those involved, forgotten. Instead, it may have far-reaching consequences in the local real estate market.

As the Regan family soon found out, the house was one of the "sinking homes" in Amherst with serious foundation issues. The Altmans completed the required property-condition-disclosure paperwork prior to the sale. The Regans, with a home warranty in place, opted not to spend the money for a home inspection that may have exposed the foundation issues.

The result: The Regans filed suit against the Altmans and both real estate agents involved in the transaction, John Fox of Hunt Real Estate Corp. and Scott Thomas of Keller Williams Realty.

Last month, a jury in state Supreme Court awarded $282,000, the full purchase price of the property, to the Regans.

The jury then divided the liability, finding that the previous owners were 75 percent liable for the verdict, the buyers were 5 percent liable and Fox, who represented the sellers, was 20 percent liable.

It is the 20 percent liability for the real estate agent that has many wondering: Was the verdict fair?

If a real estate agent is given information and he presumes it to be true, how far will he or she now have to go to verify facts? Will agents have to insulate against what could be a flurry of similar lawsuits from homeowners unhappy with their new purchase?

Some fallout likely

Stephen Kelkenberg is the Hodgson Russ attorney who represented Keller Williams Realty and its agent, Scott Thomas. Both were found not liable, and while Kelkenberg said it was a just verdict for his clients, he said he was surprised Fox was left holding a share of the financial blame.

"To me," he said, "that's the most startling aspect of this from the real estate perspective - that agents and their brokers now have to be concerned with the information they are given and what they do with that information."

Attorney Bruce Ikefugi, chair of the real estate law group at HoganWillig, said there likely will be some fallout from this case, especially if it holds up on appeal.

"There is going to be a group of agents who have never thought about these issues in the past, and they will tighten up some of their requirements and be careful to draw the seller out a little more," Ikefugi said. "The good agents will check in with questions, and we often advise to overdisclose to protect yourself against these kinds of situations."

In light of the Amherst case, Ikefugi said he plans to address elements of the case in the training course his firm offers clients.

"We cover inspection issues and estate-selling issues," he said. "I think a refresher covering this case would be a good one, because these are things they learn in their training and, for some of them, have never dealt with it since. Going forward, this certainly may be the number-one issue we are talking about."

‘Buyer beware' state

Ann Edwards, manager of Keller Williams Realty, said she doesn't see the verdict leading her to rethink the way her 68 agents operate.

"It doesn't change how we do business," Edwards said, "because we believe in having a home inspection and we believe in what the state says, which is that we live in a ‘buyer beware' state."

It is a point echoed by Sam Papagallo, a licensed home inspector from Amherst.

"I would always recommend that buyers get a home inspection, because there is a lot of information you can learn about the home," he said.

While home inspections are cost-effective (he said the average inspection costs between $250 and $400 for a single-family home), Papagallo said if there is deception involved, things can be tough for the buyer.

"Ultimately, if there is a problem with the home that the homeowner is trying to hide, the odds are in their favor," he said.